Newly-confirmed Treasury Secretary Timothy Geithner highlights “President Barack Obama’s firm commitment to transparency, accountability and oversight in our government’s approach to stabilizing the financial system,” in his announcement today of reforms to the Emergency Economic Stabilization Act (EESA). Details on the reforms are sketchy at the moment, as the new President’s commitment to vague details remains firmly in place. Read the Treasury press release here, or hit the jump for the salient points. Still no comment from the DC (neé Detroit) Two on the development, or word from the Treasury on whether this effects Terminator product placement.
Combating lobbyist influence in the EESA process: The Treasury Department will implement safeguards to prevent lobbyist influence over the program, including restricting contacts with lobbyists in connection with applications for, or disbursements of, EESA funds.
Keeping politics out of funding decisions: The Treasury Department will ensure that political influence does not interfere with EESA decision making, using as a model for these protections the limits on political influence over tax matters.
Certification to Congress on objective decision making: In reporting to Congress, the Office of Financial Stability (OFS) will certify that each investment decision is based only on investment criteria and the facts of the case.
The investment process will be transparent and based on objective criteria:
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Only banks recommended by the primary bank regulator will be eligible for capital investments.
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OFS will publish a detailed description of the investment review process undertaken by the regulators and OFS.
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The Treasury Department will ensure adequate resources exist to process applications as quickly as possible with priority to the date of the application as received by OFS and will formulate procedures to ensure integrity and regularity in the application process.
A bit of closing the barn door after the horses have fled… for instance, the machinations of congressman Barney Frank to give away up to $12 million of TARP (EESA) money to a tiny bank owned by a friend (WSJ Jan 27th):
«Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection»
OneUnited was otherwise not elegible for TARP funds because of the excessive executive compensation and free Porsche for Cohee in California:
«On Oct. 27, the FDIC and Massachusetts bank regulatory officials, alleging poor lending practices and executive-compensation abuses by OneUnited, slapped it with a strong enforcement action, a cease-and-desist order. Among other things, the officials told the bank to get rid of a 2008 Porsche for executives.»
Is this really about cars or is it a thinly veiled jab at the new President?
In order to be transparent, the program needs to give the public access to a list of TARP grants including the name of the institution, amount, and date. A nice web site would be sufficient. I can see that XYZ Bank Corp got $500 million on Jan 25, 2009. At this point we’ve had Senate and House committee meetings grilling the TARP administrator about where the money went. But no information.
Keeping politics out of funding decisions: The Treasury Department will ensure that political influence does not interfere with EESA decision making, using as a model for these protections the limits on political influence over tax matters.
I hope it works just as well. I would love to see this government bailout as free from loopholes and special interest protections as the tax code (tongue planted firmly in cheek).
Jesse :
January 27th, 2009 at 6:23 pm
Is this really about cars or is it a thinly veiled jab at the new President?
I believe it’s a not-so-thinly veiled jab at TARP and the government of hand outs in general.
“‘It is unclear whether there have been any efforts to assess the business plans, the management, or the accounting and general transparency of firms receiving aid from Treasury’s capital infusions to financial institutions,’ the Oversight Panel concluded in its first report on the program.”
http://news.yahoo.com/s/cq/20081210/pl_cq_politics/politics2995572
A real, not virtual, playground for our public servants, legislative and executive, is a nice kitty called the Exchange Stabilization Fund that is apparently managed by the above mentioned EESA. It can be used for almost anything in the name of stabilizing markets, exchanges, or whatever the Treasury Secretary has in mind as long as the President will go along. It would be nice to know what Wild Henry Paulson and Don’t Bother Me With Details Bush did. It’s often curious how the stock market will kick in with an upward surge at the end of the day.
Don’t worry, President Obama will fix everything in a short time.
Saying you can’t spend TARP funds on lobbying itself has little effect. Basically the company will spend more on lobbying from other non TARP resources (which they wouldn’t have had available without TARP funds). For instance, a poor alcoholic asks for a handout and I give him $20 with the promise he won’t spend it on booze – the alcoholic promises and uses another $20 bill he was saving for food on the booze instead.
Maybe the only way to fix it is to put a moratorium on lobbying for a fixed period of time (I think lobbying is a crooked enterprise anyway as they are there to entice / sway / buyout our already loose in the morals politicians) to prevent this situation.
There was a Saturday Night Live skit where the business plan for the (first) bailout was to go back to congress in 3 months for another bailout so that they could come back 6 months later for another. For some reason, that skit was awfully prophetic.